Question 1

Demand deposits are another term for:

Accepted Answer

A)   savings accounts.
B)   savings bonds.
C)   checking accounts.
D)   certificates of deposit.
E)   investment accounts. C

Question 2

Which CD starts with a higher rate, has a long time to maturity, and can be retired by the bank after a set time period?

Accepted Answer

A)   Bump-up
B)   Indexed
C)   Callable
D)   Global
E)   Promotional C

Question 3

Which of the following is a drawback of a money market fund from an investment company?

Accepted Answer

A)   Penalty if money is withdrawn early
B)   Lower rate of interest if redeemed within the first five years
C)   Minimum required holding period
D)   Lack of FDIC insurance
E)   Taxed at a higher rate than other investments D

Question 4

Your bank statement shows a balance of $670. Your checkbook register shows a balance of $462. You earned interest of $2 and had a service charge of $4. There are no outstanding deposits. What is the amount of outstanding checks?

Accepted Answer

A)   $210
B)   $208
C)   $180
D)   $12
E)   $6

Question 5

An all-purpose account that provides several services is a(n):

Accepted Answer

A)   NOW account.
B)   asset management account.
C)   EFT account.
D)   mutual fund.
E)   money market account.

Question 6

A savings account at a credit union is called a ____________ account.

Accepted Answer

A)   share
B)   NOW
C)   club
D)   certificate
E)   money market

Question 7

A "free" checking account with a minimum balance of $500 has an opportunity cost of lost interest.

Accepted Answer

A) True 
 B)False

Question 8

The storage of funds for future use is a purpose of ____________ services.

Accepted Answer

A)   trust
B)   borrowing
C)   credit card
D)   savings
E)   cash checking

Question 9

An asset management account typically offers the following service(s):

Accepted Answer

A)   savings.
B)   checking.
C)   borrowing.
D)   investing.
E)   All of these

Question 10

The more frequent the compounding, the less a person will earn on a savings account.

Accepted Answer

A) True 
 B)False

Question 11

This type of savings plan is usually considered to be very liquid:

Accepted Answer

A)   Bonds
B)   Stocks
C)   Certificate of deposit
D)   Regular savings account
E)   All of these

Question 12

What is the term used to refer to the yield on a long term bond issued by the federal government?

Accepted Answer

A)   Prime rate
B)   Discount rate
C)   Mortgage rate
D)   Treasury bond rate
E)   Corporate bond rate

Question 13

An advantage credit unions may have over other financial institutions is:

Accepted Answer

A)   interest-bearing checking accounts.
B)   low-cost personal loans.
C)   flexible-rate loans.
D)   credit cards.
E)   variable-rate savings plans.

Question 14

A savings account earns 4 percent. If the saver is in a 28 percent tax bracket, the after-tax savings rate of return would be ____ percent.

Accepted Answer

A)   28.00
B)   16.72
C)   4.00
D)   2.88
E)   1.12

Question 15

Which of the following statements regarding debit and credit card liability is correct?

Accepted Answer

A)   A credit card carries more risk of loss to the cardholder.
B)   A debit card carries more risk of loss to the cardholder.
C)   There is no cardholder liability if either type of card is lost.
D)   The Federal Government insures losses on credit but not debit cards.
E)   The Federal Government insures losses on debit but not credit cards.

Question 16

Tim Gleason has set up a legal agreement that allows the First State Bank of Orlando to manage funds set aside for his daughter's college education. What type of financial service is Tim using?

Accepted Answer

A)   Payment service
B)   Savings service
C)   Borrowing service
D)   Trust service
E)   Asset management

Question 17

Checking accounts are frequently referred to as ____________ deposits.

Accepted Answer

A)   common
B)   time
C)   current
D)   loan
E)   demand

Question 18

Which of the following is a way to reduce ATM surcharges?

Accepted Answer

A)   Withdraw larger amounts rather than making multiple smaller withdrawals
B)   Withdraw the minimum amount each time you withdraw
C)   Withdraw from ATMs based on their proximity to your home or place of business regardless of which bank services the ATM
D)   Withdraw from ATMs that can be used by customers from many different banks
E)   Make a separate withdrawal for each purchase to maintain a record of your spending

Question 19

Which type of organization does not provide home mortgages?

Accepted Answer

A)   Federal credit unions
B)   Savings and loan associations
C)   Employee credit unions
D)   Mutual savings banks
E)   Payroll check cashing services

Question 20

What type of account would you expect to provide the poorest yield?

Accepted Answer

A)   Certificate of deposit
B)   Passbook savings account
C)   Money market account
D)   Money market fund
E)   CD

Exam 5: Financial Services: Savings Plans and Payment Accounts